NEWSBREAKS UPDATE
The Latest on Companies, Search Engines,
and Products
By Paula Hane
Once again, the past month's
news has been dominated by developments in the RoweCom/divine situation. Following
divine's bankruptcy filing in late February, EBSCO continued to move closer
to finalizing its purchase of RoweCom's U.S. and Australian operations. According
to EBSCO, the final acquisition depends on three factors: 1) U.S. Bankruptcy
Court approval, which is expected early this month; 2) the successful closure
by EBSCO of its RoweCom Europe acquisition, which was expected to receive French
regulatory approval by late March; and 3) the support of publishers, which
represent at least 50 percent of the aggregate amount paid to RoweCom by customers—money
not forwarded by RoweCom to publishers on the customers' behalf. EBSCO predicted
that it would reach the 50-percent quota before the end of March.
Meanwhile, reports indicate that divine now faces the possibility of criminal
charges stemming from a federal grand jury investigation. In addition, the
civil fraud suit filed by RoweCom against divine is still pending. Libraries
and publishers continue to reel from the effects of the debacle.
Search Engine Developments
A series of recent acquisitions reveals the pressures and mounting rivalries
in the Web search arena. Competition is so tight that companies are consolidating
their capabilities to stay in the running. And all the companies are gearing
up to counter Google's massive presence.
At the end of2002, Yahoo! announced that it would buy Inktomi, which had
been concentrating its efforts on Web search and its paid-inclusion business
after selling its enterprise search software to Verity. In February, Google
said it would acquire Pyra Labs and its Blogger publishing tool, thus marking
the company's entry into the world of Web log content. (For reactions to the
Google purchase, see David Mattison's NewsBreak at https://www.infotoday.com/newsbreaks/nb030224-2.shtml.)
Soon after Google's move, Overture, a pay-for-placement ad service, announced
that it would purchase both AltaVista and the Web search assets of Fast Search
and Transfer (FAST), including its showcase site, AlltheWeb.com. The acquisitions
have positioned Overture to supply feeds—accompanied by advertising opportunities—to
large Web site services such as MSN (which currently uses a feed from Yahoo!'s
Inktomi). Searchers expressed some worries about the Overture ownership. Both
AltaVista and AlltheWeb are popular with power searchers, and some fear that
this consolidation will result in the loss of innovation and competition. (For
more details, see Barbara Quint's NewsBreak at https://www.infotoday.com/newsbreaks/nb030303-1.shtml.)
As this issue went to press, Disney, owner ofGo.com, announced that Google,
rather than Overture, would power the Disney sites. The next day, Disney officials
reportedly said the company was in discussions to sell its Infoseek Internet
assets. These days, it sure is hard to keep track of which engine powers a
site or even who owns what.
D&B, Hoover's Update
In early December 2002, D&B made a $7-per-share purchase offer for Hoover's.
The deal was surrounded by controversy, however, and an interesting saga ensued.
Some investors and analysts were critical of the low purchase price, saying
Hoover's was giving away the company. Statements and counter-statements flew
back and forth, and a lawsuit was even filed that sought to block the D&B
purchase.
Marathon Partners, a 9-percent Hoover's shareholder, teamed up with technology
investor Austin Ventures and made a higher offer. The bid was abruptly withdrawn,
however, after D&B said it would not raise its bid (https://www.infotoday.com/newsbreaks/nb030217-1.htm).
Finally, on March 3, Hoover's stockholders approved the merger with D&B.
A big sigh of relief was no doubt heard in Austin, Texas, and in D&B's
New Jersey headquarters. Now Hoover's customers are holding their breath to
see what will happen under new ownership. At the time of the offer, D&B
said that it planned to maintain Hoover's Online as a separate product offering
of its E-Business Solutions division, with Jeffrey Tarr, Hoover's chairman
and CEO, continuing to lead the Hoover's business from its Austin location.
Company Financials
It's been a tough year or so for most companies. There has been a lot of
belt-tightening and cost-cutting—and no small measure of worries about
the economy and geopolitical uncertainties. For many businesses, the story
has included sliding revenues, shrinking profits, and dismal stock prices.
Reuters Group, PLC
Reuters Group, PLC reported its annual results for 2002 and recorded its
first-ever loss (roughly $794 million). The financial news and price-reporting
company did not have a good year, with revenue down 8 percent. Reuters said
it would lay off some 3,000 workers over 3 years. It also announced a five-point "accelerated
strategy" for stemming its losses. At the same time, the company reported that
it was buying Multex.com, Inc., a provider of global financial information.
(For analysis and reactions, see Marydee Ojala's NewsBreak at https://www.infotoday.com/newsbreaks/nb030224-1.htm.)
Analysts from Outsell, Inc. noted that the Multex purchase fills a content
gap for Reuters. The advisory firm said: "Multex owns Market Guide, a source
of the kind of high-quality fundamentals data that will complement Reuters'
existing strengths in pricing data. Beefing up on proprietary content will
enhance its competitive position against Thomson Financial and Bloomberg."
Thomson Corp.
The financial picture was somewhat mixed for Thomson Corp., the Toronto-based
electronic mega-publisher. Thomson reported that its revenues grew 7 percent
to $7.8 billion in 2002, but net income was down 20 percent. The company said
that costs from its acquisition of educational publisher Harcourt General contributed
to reduced profits. It also blamed economic softness and market uncertainty
for its weaker results. Thomson said it expects the uncertain market environment
to continue in 2003 and doesn't anticipate that it will meet its long-term
revenue growth targets.
Thomson's legal, educational, and scientific business units outperformed
its financial unit in 2002. Thomson Learning's revenues were up 24 percent,
while Thomson Financial's revenues declined by 3 percent for the year. However,
Thomson Financial recently announced a 5-year global agreement with RBC Investments
to provide the Canadian marketplace with 3,300 Thomson Workstations as well
as market data and services to RBC. The deal also includes the renewal of 4,000
Thomson Workstations at RBC Dain Rauscher in the U.S. Terms of the agreement
were not disclosed.
At the end of 2002, Thomson Financial made headlines when it grabbed a lucrative
contract with Merrill Lynch away from Reuters. The deal is believed to be worth
more than $1 billion over 5 years.
Wolters Kluwer
While Dutch publisher Wolters Kluwer reported that its 2002 revenues increased
2 percent (to about $4.3 million) and its net income grew 8 percent, it said
that profits may fall up to 6 percent in 2003 due to divestments. After this
gloomy announcement, Wolters Kluwer's stock price plunged to a near 10-year
low. Then, Reed Elsevier's shares also fell, as did those of educational publishers
Pearson and VNU. Media outlets reported concerns over reduced textbook orders
in the U.S.
Wolters Kluwer also designated new leadership for the company. Starting Sept.
1, 2003, Nancy McKinstry will serve as chair of Wolters Kluwer's executive
board. McKinstry is presently a member of the board and will succeed Rob Pieterse,
who is retiring.
Some Encouraging Signs
As I mentioned last month, a few companies in the information industry are
beginning to show some signs of revenue growth and increased profitability,
despite the continuing challenge of tough economic conditions and constraints
on corporate spending. Stock prices remain generally depressed, however.
Reed Elsevier
Reed Elsevier released its preliminary results for 2002, which report strong
overall growth (with revenues up 13 percent) and adjusted pre-tax profits up
11 percent at constant rates. The full-year revenue for 2002 was about $8 billion.
Even LexisNexis, which had been struggling inthe U.S. legal market, performed
well and continued its turnaround. Revenues and adjusted operating profits
were up 5 percent and 10 percent respectively.
Despite difficult market conditions, the company noted that it had achieved
the financial targets it set up 3 years ago. Crispin Davis, Reed Elsevier CEO,
commented: "The strong performance in 2002 underscores the turnaround in the
business over the last 3 years. We have a strong business, a clear strategy,
a well-motivated and experienced management team, and a relentless commitment
to execute against our objectives. Despite the adverse economic environment,
we continue to see significant opportunities for growth and have a good pipeline
of initiatives to deliver on them."
An Associated Press report on the news stated: "The results again proved
the resilience of the Anglo-Dutch publisher's subscription-based operations.
Reed's portfolio ranges widely, from Construction News magazine to elementary
school textbooks."
ProQuest
ProQuest reported its financial results for the year that ended Dec. 28,
2002. Revenues were $428.3 million, compared with $401.6 million in 2001—an
increase of 7 percent. Earnings before interest, income taxes, depreciation,
and amortization were $137.2 million, an increase of 13 percent over 2001.
For fiscal 2003, the company projects total revenue growth of 11 to 13 percent.
The press release stated, "Our guidance assumes no improvement in the state
of the economy and continued tightening of budgets for libraries."
Premium Content via Microsoft Office
Several information industry providers are crowing about their recently announced
alliances with software heavyweight Microsoft. The company released the beta
2 version of its new Microsoft Office System. This suite offers a coordinated
set of programs that Microsoft says will address productivity challenges in
today's enterprises.
Among its many options, the new system features a Research Library Pane that
allows users to search for information from within applications. In the initial
release of the product, users can search Factiva's Publications Library, Gale's
Company Profiles, or Alacritude's eLibrary. Barbara Quint says this move represents
a great opportunity for commercial online services to prove their worth to
a broad array of end users, but it does raise some interesting issues. (For
more, see Up Frontwith Barbara Quint on p. 7 and the NewsBreak at https://www.infotoday.com/newsbreaks/nb030317-1.shtml.)
According to the announcement, several core Office System products are provided
in the beta evaluation kit: beta 2 versions of the new Microsoft Office Suite
(Word, Excel, Outlook, PowerPoint, and Access); two new Office System additions,
Microsoft Office InfoPath, and Microsoft Office OneNote. Also included are
Microsoft Office FrontPage, Microsoft Office Publisher, Microsoft Windows SharePoint
Services, and Microsoft SharePoint Portal Server 2.0. Final versions are expected
this summer.
For the latest industry news, check https://www.infotoday.com every
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NewsLink, which provides abstracts and links to the stories we post.
Paula J. Hane is Information Today, Inc.'s news bureau chief
and editor of NewsBreaks. Her e-mail address is phane@infotoday.com.
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